How to change the color of hair in blender internal?
There are no material nodes needed. (Before cycles the material node were hardly ever used.)

The following steps assume you already have two materials on your object, one for the emitter and one for the particles.

With the material used for the hair active, go to the texture tab.  


Add a texture and set the type to "Blend"
Set the mapping to "Strand"
Check the "Ramp" checkbox in the Colors section.
Add colors to your heart's content.




That's really all there is to it. The Strand mapping is the key.



A little bonus if you miss the thickness settings from cycles hair, then you will like the Strand section of the materials tab.
Here you can set the thickness of the root and tip, and the shape (all very similar to cycles counterpart). The one feature BI's hair has over cycles is you can specify the size in blender units instead of just pixels.